Maximizing Outcomes with Google: A Lesson on Adwords Optimization

Interviewer’s Note: Stefan is also offering a paid course– AdWords Profit Shortcuts is an online course teaching the most effective hacks learned from spending $50M+ in ad budget, running hundreds of AdWords experiments and analyzing millions of clicks.

Please tell us a little more about yourself and your Adwords optimization consulting practice.

I’ve been working in online advertising for the last ten years. I first got started by launching a small publishing business from my college dorm. AdWords was the only marketing channel I used to sell more than a quarter million dollars worth of products. I learned a lot about direct response and advertising performance from this first venture.

After college I worked in online marketing agencies in Europe and Australia. For the last few years, I’ve been running my own consulting business helping companies optimize and scale their digital advertising strategies. More recently I’ve also started writing about these strategies on my blog. I’m also about to release my first advertising course where I share the most effective shortcuts learned from spending 50M+ dollars on AdWords campaigns.

Adwords is such a crucial piece to advertising, if not the first place businesses (both online and offline) should go to try and reach their potential customers. Have you found any other channels outside of search that have proven more effective than Google search?

Search advertising (and AdWords in particular) really is the king of online advertising. There’s no other ad format that allows you to put an ad in front of someone who is actively searching for a specific product or service. So for most businesses AdWords is an effective advertising channel. Other ad networks that can be very effective are Facebook Ads and targeted media buys (for example through a platform like Site Scout).

A few years back Google started to integrate all their advertising offerings into Adwords, and now search, display, mobile, and YouTube can all be purchased in one platform. What percentage of marketers do you think use this unified buying platform to purchase across all channels, rather than just focusing on paid search ads?

AdWords is definitely making it easy to spend more budget across all of their ad channels. For example, the campaign type “Search Network with Display Select” will serve your ads on search, display and also on YouTube. I’m not sure what percentage of advertisers use this campaign type but it’s typically less experienced marketers who opt for this kind of convenience.

However, the best results are achieved by running separate campaigns for search and display. Start with search and only expand to display after you have built a solid foundation. I’ve worked with many businesses which were able to run profitable campaigns on search but not on display. I’ve never come across a business which was only profitable on display but not on search.

Bid optimization has its place, especially when you are bidding on thousands of keywords and spending millions of ad dollars per year on online advertising. However, for most small businesses I think these services are an additional expense with little upside in terms of ROI and saved optimization time.

What are some common mistakes that new Adwords customers make, and how can they mitigate these potentially costly errors?

I’ve previously written a whole article about common AdWords mistakes here.

Most of the costly mistakes are either a result of not understanding the technicalities of AdWords or a lack of attention to detail when it comes to campaign management and optimization.

The difference between broad, phrase and exact match keywords is an example of AdWords technicalities that many advertisers are not familiar with. They end up wasting a lot of budget by running only broad match keywords without using negative keywords. Broad match is a great AdWords feature but you need to understand that it can trigger almost any related keyword and therefore needs to be monitored closely. The best way to avoid AdWords mistakes due to not understanding the technicalities is to really study the platform and potentially follow a course on it.

When it comes to mistakes due to lack of attention to detail, marketers of all experience levels are guilty of this. It can be the result of not having enough time to manage campaigns or just laziness. One example of this is to run campaigns on desktop and mobile without actively adjusting the mobile CPCs based on performance. Mistakes like these sound so simple but they happen all the time because advertisers don’t dig into the statistics and make adjustments based on performance. A good way to prevent this is to either schedule optimization routines in your calendar (e.g. check search query reports and add negative keywords every Monday) or to outsource the campaign management altogether.

There are a wealth of targeting options when buying both paid search, or display campaigns using Adwords. Which of these targeting options have you found most effective, and which ones would you say are the most underutilized?

When you are targeting both desktop/tablet and mobile traffic in one campaign, it’s important to use bid adjustments for mobile traffic. In order to generate the same kind of ROI as on desktop, you typically need to lower your mobile bids (in some cases by up to 60-70%). AdWords allows you to set mobile bid adjustments on an ad group level.

During Google I/O in Oct of 2015, Google revealed some pretty astonishing usage numbers across each platform: 900M for Gmail, and 1B monthly Android users (along with their billions of users for Search, YouTube, and Maps). Their products touch almost every part of our lives. Do you ever see any company/start-up disrupting any of these core Google products in the near or long-term?

Google search, Gmail and Maps are all great products. I think one interesting area to watch is Facebook search. Facebook has continued to add more features to its search functionality. There is a lot of value in socially weighted search results. If you are looking for a new restaurant or place to visit, chances are you will like it if ten of your friends have already been there.

However, at this point it’s not so much that I see any startups disrupting these core Google products. It’s rather that other companies are starting to take a piece of the pie in new segments of the online advertising market. For example, AdWords is not the best platform to drive mobile app installs. Twitter and especially Facebook are much more popular to generate mobile app installs.

Secondly, split test ads in all of your ad groups. When split testing ads make sure you choose the campaign setting “rotate evenly”.

Thirdly, keep in mind that increasing CTR is only effective as long as you don’t lose relevance. For example, emphasizing something “free” or inexpensive in your ads can easily increase your CTR but you might attract the wrong segment of the market. So in the end you would end up with a higher CTR but a lower conversion rate which is not what you want.

Google has built an end-to-end stack through their multiple acquisitions in the advertising space: AdMob (mobile ad network), Doubleclick (advertiser & publisher ad serving and ad exchange), AdMeld (Ad exchange), Teracent (Creative Optimization), Adometry (Attribution), Spider.io (Anti Ad-fraud), Urchin (now Google Analytics), and of course Applied Semantics (the basis for Adwords). Although there are some other companies like Appnexus trying to build an end-to-end solution for advertisers, Google is really the only company with this horizontal ensemble. Do you think there will be an eventual point where all these products are rolled into the same platform that buyers can access? (even merging of Doubleclick Bid Manager with Adwords?)

The main challenge here is that AdWords needs to appeal to a broad mix of advertisers (beginners, intermediate and professionals). A lot of less experienced marketers are already overwhelmed by the current set of features and functionality of AdWords. If additional features only appeal to the most sophisticated advertisers, it makes more sense to offer them as integrations. So ultimately, I doubt that we will see all of these services in one solution because it would become too complex for a large segment of AdWords customers.

Lastly, where do you think the future lays for Google as it pertains to their the advertising landscape? Will they continue their dominance of all channels?

I would say that search is the only channel that Google really dominates. Google continues to deliver the best results and other products like Google Maps and YouTube perfectly tie into the mission to “organize the world’s information and make it universally accessible and useful”.

One area where Google’s dominance in search could be challenged is user privacy. If you are using most of the Google products (Search, Gmail, Maps, Docs), there’s one company which basically knows everything about your life.

There’s already a trend towards becoming more privacy conscious. DuckDuckGo has become popular just based on the premise of “real privacy”. In a few years from now (or maybe after the next privacy scandal) people might be happy to sacrifice search result quality to gain more privacy.

Outside of search, the online advertising landscape is already a lot more diversified than ten years ago. Google’s market share in segments outside of search is significantly lower. Advertisers have quite a few options to choose from in display and mobile advertising. Facebook’s Atlas technology is a big threat for Google. It can offer sophisticated targeting features for advertisers and a better way to sell ads for publishers (i.e. the next Google AdSense).

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